Things you should know before applying for loans

A loan scam is when a fictitious organization or an individual attempts to steal money from loan seekers pretending to be legitimate lenders. Unfortunately, in this post-pandemic period, the economic downturn has given loan scammers a chance to be more prevalent. Therefore, increasing threats of loan scammers compel loan seekers to opt for countermeasures. Needless to say, being well informed about the maneuver these perpetrators own can help loan seekers to stay ahead of the threats of loan scams.

Types of loan scams and how to avoid them

• Illegitimate websites
• Phishing or Email scams
• Upfront loan fee scams
• False check scams
• Debt settlement scams
• Absence of physical addresses
• Incomprehensible procedures
• Guaranteed approval
• Payday loans
• Impersonating government agency scams
• Verify before you trust

Illegitimate Websites

Loan scammers develop their own websites pretending to be the existing websites run by legitimate lenders. They copy the domain name of the legitimate website as well as their web design in order to trick imprudent loan seekers. They sometimes even provide license or registration numbers on their websites that aren’t actually theirs. They create these websites so that they can garner loan seekers’ personal information related to their bank accounts to later get access to them, or they directly steal their money using these websites.

Phishing or Email Scams

Emails have become a common mode of perpetrating mischief for loan scammers nowadays. Through emails, these scammers disperse malicious links to their targets. By tapping on these links, targets get redirected to fictitious websites, where the scammers continue their money-sweeping scheme.

Upfront Loan Fee Scams

Sometimes loan scammers offer the loan seekers an advance at a very low interest in exchange for upfront money which they often ask as an application or sometimes as a processing fee. Scammers seldom enquire about loan seekers’ credit scores and propose incredible loan offers with extremely low-interest rates. Loan scammers primarily target individuals with low credit scores as they are more desperate and have very few companies offering them loans. Always remember that legitimate companies are very less likely to ask for advance payments before loan approval.

False Check Scam

A false check scam occurs when a fraudulent company asks people to deposit a check to their own account and then fraudulently asks to wire it back to them. They even trick online business owners and sellers disguised as buyers. They fool them by claiming that they had overpaid them mistakenly and ask for a refund when they did not even make any genuine payment.

Debt Settlement Scams

Debt settlement companies are those which help people submerged in debt by negotiating with their creditors to reduce as well as cancel their debts. Unfortunately, in this era of recessions, scammers target these debt-ridden people. They pretend to be a debt settlement company and claim that they will help them in reducing or canceling their debts. Then they ask for payments in advance and run away with it once they have successfully garnered it.

Absence of Physical Address

Fraudulent lenders are very less likely to have a physical address. So it will be a clever move if you search for their physical address on their website if the lender you are dealing with seems fictitious. Ingenious scammers sometimes provide fake physical addresses of vacant plots or addresses that do not exist. In this case, you can copy their address and search for it in Google Maps.

Incomprehensible Procedures

Fictitious lenders are often not transparent about their fees and procedures. As they are intended to run away with loan seekers’ money, they are frugal about disclosing this information, whereas legitimate lenders are all transparent about their procedures and fee breakups, and this information is apparently available on their websites.

Guaranteed Approval

They are loan scammers who come up with proposals like guaranteed approval on applying etc. However, legitimate lenders seldom guarantee approval as they need you to meet certain requirements in order to proceed with the loan for you, whereas corrupt lenders do not focus on these much as they are not intended to lend you any money.

Payday Loans

Be wary of the lenders who offer you Payday loans, as it is illegal in many states. Moreover, it is hard to pay back a Payday loan in such a short time, and it may compel you to apply for more loans to pay back your previous loans. Perpetrators offer such loans in order to trick loan seekers.

Impersonating Government Agency Scams

Scammers sometimes pretend to be calling from a government agency, offering you loans. They choose to impersonate the government as people easily trust them and do not think twice before handing over their personal information. Scammers convince their targets to opt for their loans and ask for private data relating to their bank accounts. They garner all the information they need in order to get access to their bank account and eventually steal their money.

Verify Before You Trust

Before you trust a lender, verify their legitimacy. Go through their websites, and look if it is registered or not. Then, search for their registration number. If they do not have any, avoid dealing with these lenders. Sometimes fraudulent companies even copy the registration number of a legitimate company. So it is advisable to opt for all the means that can bolster your security before you make any decisions.

How to spot a loan scam?

These ingenious scams flourish on peoples’ gullibility. Independent investigations are useful in preventing loan scams from fooling people as it helps us figure out the characteristics of these tricksters. Moreover, a doubtful approach toward these strategies can save you from future regrets. Some tips to spot a loan scam are discussed in this article.

Here are some of the things a loan seeker should be wary of,

• Sense of urgency while convincing to opt for loans
• Lack of information and contact details
• Procedures too complex to comprehend
• Dealing everything with patience
• Grammatical errors and spelling mistakes
• Vulnerability of online platforms
• Skeptical approach toward loan offers

Sense of urgency while convincing to opt for loans: 

A fraudulent company is very likely to rush its targets to opt for its loan offers. Scammers, while convincing their targets, use sentences that are stuffed with words that create a sense of urgency. Moreover, they often come up with limited offers and deadlines, which are totally unnecessary and suggest the possibility of the company being fraudulent.

Lack of information and contact details: 

Fraudulent companies always lack contact information on their websites, emails, and messages. They are frugal about sharing this information as they are intended to run away with their client’s money. When their contact details are not easy to access, it will be hard for people to contact them if they lose money in the process. Unlike these fictitious companies, genuine companies ensure investors’ convenience and avoid making reaching out to them hard when their customers wish to get in touch with them. If the company you are trusting your money with lacks this information, you should avoid dealing with them.

Procedures too complex to comprehend: 

Fictitious organizations often make their company policies and procedures hard to be comprehended. They sometimes mention foreign or offshore investments, so it gets hard to locate their funds if the scammers decide to run away with them. Never forget that the policies and procedures of any organization that deals in public money to bring them profits should not be too complex to comprehend.

Dealing everything with patience: 

Always remember that dealing with everything patiently is the key. Take your time before making any decisions. Conduct independent research as it serves as a countermeasure for loan scams as well as provides you with hours to understand the nature of the scheme and intentions of the scammers.

Grammatical errors and spelling mistakes: 

Keep an eye out for grammar mistakes and spelling errors, not only in the content available on their websites but also in the emails and messages they send related to loans. A legitimate company is more careful about the content they publish on its website. They make sure that their messages and emails are sent free of errors. In contrast, an illegitimate company only cares about how skillfully and quickly they can steal money from their targets.

Vulnerability of online platforms: 

The acceleration of digital modernization and the progression of online communication has provided scammers a huge ground to turn more prevalent. Therefore, people should be wary of online loan scammers as they use these online platforms to commit forgery. 

Skeptical approach towards loan offers: 

A doubtful approach toward these lenders may prove useful in preventing these scammers from perpetrating loan scams. Moreover, if you still get scammed after taking all the precautions, you can take help from organizations that help people in recovering their funds lost to forgery. You can easily find these organizations on the internet.